The mounting digitization of FinTech means that contacts between investors and advisor are going to either multiply and increasingly become remote; the customer is likely to receive more information and advice than now, even without getting physically in touch with the advisor every time.
So said, it comes natural to think of removing the need of signing documents and contracts by hand. A secure and easy-to-use electronic signature (e-signature) system could go a long way toward multiple goals like fasten procedures, improve security, and doing a favor to environment by saving a fair amount of paper (and ink, at this extent).
However, to enable such a system is much easier said than done: markets are making strides in educating companies and individuals to a responsible and secure use of technology, but when investments are concerned, investors want to feel they can actually trust the system, before they come onboard. On the other side, advisors better should build digital infrastructures able to resist threats and misuses, and this especially applies to e-signature.
How e-Signature Works
To make a really long story short, e-signature – like every authentication method – is a mix of trust and math. The former is needed because transactions are done without physical co-presence as a request; the latter must ensure that any encryption of data is unbreakable by external observers with malicious intents.
E-signatures information are in fact encrypted, to travel in the regular Internet, by means of public key encryption technology. It all boils down to a matter of prime numbers and their multiplication.
Think of this: it’s very easy to tell the result of a number multiplied by another number, e.g. 13 times 11 is rather clearly 143; if brains are not enough, the humblest pocket calculator easily does the math.
But factorization, the inverse process, isn’t quite so easy. Quick: what primes are multiplied to get 133 as a result?
Quickly finding the correct answer is pretty difficult, isn’t it? We could have a calculator at hand, but chances are we haven’t a function ready to factorize 133 and find the result (by the way, the answer is 19 and 7).
A good programmer could easily meet the challenge, by writing a factorization function. A common computer could then factorize 133 in a matter of nanoseconds.
The trick of professional-grade encryption lies in multiplying truly enormous primes. Performing the multiplication is trivial, for a computer; but the number of calculations needed to factorize the result grows exponentially, so that enough big primes contribute to create numbers that, as of today, are de facto untraceable by modern hardware and software.
This technique is used behind the scenes to create a private key, that must remain secret, and a public key, that can be publicly exposed. Someone who wants to secretly send us information can get our public key and use it in the encryption software together with his/her private key. Information encrypted in this way can be seen only by us, applying to it our private key. So we can be sure and safe about the authenticity either of the content and the sender. When it’s our turn to communicate, we’ll use our private key together with the public key of our target.
This is an extremely basic representation of what happens behind the scenes of e-signature. What is important to know is that both parties can trust one the other, and nobody else can mess with the transactions or attempt to steal information.
At Objectway, we constantly work to carefully hide all the complexity and present to the client an e-signature process that is easy, transparent, and completely secure. For instance, a client can choose in Conectus to electronically sign a document either the traditional biometric way, by manually signing the document on screen with a tip pen, or receive an authentication token via SMS to be typed into the interface.
The result is the same: the document is trustfully signed and securely archived in the system, authenticated and protected.
Security at Distance
These principles are to be seamlessly integrated in the software available to the customer, with a clear and easy interface, that allows him/her to manage signed documentation and forms with the same simplicity than the traditional handwritten signature, but with a higher degree of freedom. The customer can indeed sign documents anytime and anywhere and this allows more time and attention to the actual content of what is being signed.
On the advisor’s side, it becomes possible to remotely interact with the customer and close contracts and manage transactions with the customer’s approval (and signature) regardless of he/she is actually located, and in asynchronous mode too: when there is the customer sign of approval, the advisor can freely proceed on behalf of the customer, saving time and money in the meantime.
E-signature has the potential to be a true disruption agent in FinTech, since it transforms the signature procedure into a competitive advantage: the better the system, the easier it could be to convert a prospect and gain an edge over competitors. By removing the space and time obstacles that have always constrained signatures to a manual process that happens in an office, e-signature can accelerate business and give a greater degree of freedom to the advisor and, more importantly, the customer.